2005-12-18 04:00:00 PDT Jerusalem -- Israeli leaders may be saying publicly that Syria's murky role in the assassination of former Lebanese Prime Minister Rafik Hariri could finally bring down the shaky regime of Syrian President Bashar Assad. Yet behind the scenes, these same Israelis admit they would rather have a weak but stable Syria for a neighbor than a shattered country that could turn into another Iraq.

A damning U.N. report released Monday said Syria continued to interfere with the investigation into Hariri's murder. On Tuesday, a popular journalist named Gibran Tueni also was assassinated -- apparently at Syria's hands.

The latest report bolsters the conclusions of one issued in late October by the U.N.'s chief investigator, German prosecutor Detlev Mehlis, tracing Hariri's murder to Assad's inner circle -- and focusing a spotlight on Syria's long-standing meddling in Lebanon.

The United States, which is pushing for United Nations sanctions against Syria, says Assad is helping the Iraqi insurgency. On Thursday, the Security Council voted to extend the investigation into Hariri's murder for six more months, postponing a decision on sanctions.

"I think there needs to be change in Syria," Israeli Vice Premier Shimon Peres said last month on Israel Radio. "If it's true that the government there is involved in the murder, this will shake up the rule of the Assads."

Peres said it was "neither natural nor acceptable" for a family representing a small minority to rule Syria with such "brutality."

Israel contends that Damascus willingly offers haven to Hamas, Islamic Jihad and other radical Palestinian groups, that it channels weapons used against Israel to the Hezbollah militia in southern Lebanon, and that it undermines Middle East peace efforts at every turn -- charges that Syria has denied.

"Syria is harboring terror, supporting terror and financing terror," Israeli Defense Minister Shaul Mofaz charged during a recent visit to London. "All the centers of terror are based in Damascus. There is a flow of money coming from Syria to the terror organizations in the West Bank. Syria supports Hezbollah by allowing them to use Lebanese soil as a platform for attacks against us. It is also clear that the Syrians are allowing the movement of terror groups into Iraq, and these organizations are attacking U.S. and British forces."

Yet some Israelis say the U.N. reports and the light they shine on Syria's internal operations could be used to international advantage.

"Before imposing sanctions, there is an opportunity to ask the Syrians to cooperate fully with the international community by getting rid of the terrorist headquarters in Damascus and cutting all contact with the Hezbollah," said Danny Yatom, former head of the Mossad intelligence agency and now a Labor member of Israel's parliament. "(Assad) might decide to do that and survive, instead of taking the risk of refusing to cooperate with the demands of the U.N. and the international community."

Yatom warned that Security Council action on sanctions "might destabilize the regime."

"He is not as strong as his father; he is relatively weak," Yatom said in an interview. "Even before this report, the regime was not stable."

Bashar Assad inherited his post from his father Hafez Assad, who died in 2000 after a three-decade reign in which he ruthlessly repressed all domestic dissent. The younger Assad's rule, like his father's, is based around a tiny ruling clique drawn almost exclusively from relatives and members of his minority Alawite sect. Both father and son controlled Lebanon through surrogate politicians and a military occupation until protests following the Hariri killing forced Syrian troops to draw back across the border.

Eyal Zisser of the Moshe Dayan Center at Tel Aviv University said that short of an Iraq-style military invasion by the United States, there was little hope of forcing Assad from office -- and, ironically, that served Israel's interests in the foreseeable future.

"Israel's interests would not be served by Syria becoming the new Iraq," said Zisser. "Most Israelis would prefer Bashar to stay in power. He is a weak but effective ruler. As long as he is under pressure from the U.S. and now the U.N., he will be on the defensive and can cause little trouble for Israel."

Like Israel, the United States would rather see Bashar Assad reform his country rather than be forced out.

"I think one of the things that Syria has learned is that noncompliance with international demands will lead to isolation," President Bush told Al-Arabiya television network in an interview after the October U.N. report was released. "Nobody wants there to be a confrontation. On the other hand, there must be serious pressure applied."

The uncertainty about Syria's short-term future also affects the dispute between Israel and Syria over the Golan Heights, which Israel has occupied since the Six Day War in 1967. Previous Israeli governments have held quiet negotiations with Syria over the return of the strategic mountain range, which dominates northern Israel and is less than one hour's drive from Damascus.

The Golan Heights remain underdeveloped and sparsely populated, with only 15,000 Jewish settlers and about the same number of Syrian Druze on the Israeli side of the cease-fire line.

In early 2000, then-President Bill Clinton hosted the only open negotiations between Israel and Syria, but Hafez Assad rejected the Israeli proposals made by then-Prime Minister Ehud Barak. Within a year, the elder Assad was dead, the Palestinian intifada had erupted, and Barak had been replaced as prime minister by Ariel Sharon. The Golan issue went into the deepfreeze.

Israel "is not interested in returning the Golan Heights to Syria -- domestically, it would be political suicide and they would be offering Bashar a gift he clearly does not deserve," said Zisser. "For their part, the U.S. has no interest in engaging in talks with Assad because it would enable him to avoid U.S. pressure on other issues, including his support for terrorism."

As the Security Council debates the question of sanctions, the members must bear in mind that Syria's economy is in a terrible state and sanctions could cripple the country -- perhaps setting off internal unrest. Unemployment is running above 20 percent, according to a recent U.N. Development Program report, and more than 30 percent of Syria's 18 million citizens are living in poverty.

Some two-thirds of the country's exports are accounted for by its fast-dwindling oil production, which has slumped by 20 percent in the past decade. The freezing of commerce with the European Union, Syria's largest trading partner, would stop development in its tracks, and U.N. sanctions would also cut off vital EU loans to the Syrian government.

"If they only freeze assets of people mentioned in the report, Syria will not be affected," said Nabil Sukkar, managing director of the Syrian Consulting Bureau for Development and Investment. "But if they freeze government assets, then it will be disastrous."

Perhaps for that reason, Rafik Hariri's son Saad told a press conference in London after the first U.N. report was released that he opposed sanctions that would affect the Syrian people, arguing that only those involved in his father's killing should be punished.

Israel also would prefer it if Syria were not plunged into chaos.

"The Israeli-Syrian arena is very quiet and has been for years," said Zisser. "Why would Israel want to replace it with an Iraqi-style scenario?"